The US Dollar traded stronger against other major currencies with the US Dollar Index (USDX) closing 0.25% higher on Tuesday.
Gold further declined to a new year-to-date low as the Dollar continued to show strength and US Treasury Note yields climbed higher. Oil closed slightly lower in a volatile day, with support received form declining stockpiles in the US, according to data from the API.
After initially being depressed by concerns over an escalating trade war, equity indices climbed higher in late trading hours on Tuesday and continued to move higher early on Wednesday.
Cryptocurrencies traded at lower volatility levels with Bitcoin able to hold above the $6,500 level and Ethereum above $500. On Wednesday another South Korean cryptocurrency exchange – Bithumb - announced a break-in with more than $30 million worth of cryptocurrency stolen. The theft from the Coinrail exchange 1-1/2 weeks ago coincided with another fall in cryptocurrency prices.
On Wednesday in the United Kingdom the CBI Industrial Trends Survey is set to be released. Also on Wednesday a speech by Fed Chairman Powell is expected at a conference in Portugal. In the Asian-Pacific trading session on Thursday Japan will release its All Industry Index and Australia its Gross Domestic Product (GDP) data.
The EUR/USD further declined on Tuesday as the President of the European Central Bank (ECB), Mario Draghi mentioned during a keynote address that despite efforts by the central bank to tighten its monetary policy it will not take any rash decision to raise interest rates.
The Current Account of the Euro-zone published on Tuesday was down to €28.4B (expected €30.3B). The German Producer Price Index (PPI) released early on Wednesday was up by 0.5% m/m (expected +0.4%).
On Wednesday the participation of Federal Reserve Chairman Jerome Powell is also expected at the conference in Portugal, where earlier the ECB President gave his speech.
Pivot: 1.16 Support: 1.153 1.15 1.1455Resistance: 1.16 1.1645 1.1675 Scenario 1: short @ 1.1570 with targets @ 1.1530 & 1.1500 in extension. Scenario 2: above 1.1600 look for further upside with 1.1645 & 1.1675 as targets. Comment: the RSI is mixed to bearish.
The GBP/USD fell to a new 7-months low on Tuesday as analysts see the outlook for the British economy as bleak and expect the Bank of England not to raise interest rates before the last months of the year. Mixed economic data and continued uncertainty how Brexit will play out helped the Pound to lose close to 6 percent in the second quarter of this year.
On Wednesday the CBI Industrial Trends Survey is set to be released. The Bank of England (BoE) is set to make its interest rate decision on Thursday, followed by the release of its Quarterly Bulletin on Friday. Next week on Friday data on Consumer Credit, Current Account for Q1 and GDP for Q1 is due for release.
Pivot: 1.319 Support: 1.3125 1.3075 1.301Resistance: 1.319 1.322 1.327 Scenario 1: short positions below 1.3190 with targets at 1.3125 & 1.3075 in extension. Scenario 2: above 1.3190 look for further upside with 1.3220 & 1.3270 as targets. Comment: the RSI is mixed to bearish.
WTI Oil
Oil settled only marginally lower on Tuesday in a volatile trading day ahead of the much awaited OPEC meeting in Vienna later this week. The relatively moderate losses were attributed to support oil received after the American Petroleum Institute (API) revealed that stockpiles for crude oil in the United States fell by 3 million barrels (previous week +0.8 million barrels).
As oil demand in part relies upon positive economic growth, the fears of a further escalation in the trade conflict between the US on one hand and China and also other countries on the other pushed equities on the announcement of tariffs lower.
On Wednesday the Energy Information Administration (EIA) is set to release its weekly statistics on crude oil, gasoline and distillate stockpiles in the US. Energy traders will listen carefully to statements from decision makers ahead of the OPEC meeting on Friday and Saturday.
Pivot: 69.75 Support: 64.4 64 63.4Resistance: 65.8 66.2 66.8 Scenario 1: long positions above 64.40 with targets at 65.80 & 66.20 in extension. Scenario 2: below 64.40 look for further downside with 64.00 & 63.40 as targets. Comment: the RSI advocates for further advance.
US 500
While concerns over consequences of the trade conflict with China initially pushed equities lower, the equities markets moved higher in the late trading hours on Tuesday and continued trading higher in early trading on Wednesday. Data on Housing Starts at 1.35 million (expected 1.32 million) and Permits at 1.301 million (expected 1.35 million was close to the expected levels).
Especially basic materials (US Basic Materials ETF -1.83%) and industrial (US Industrial ETF -2.15%) faced losses on Tuesday, while there was an uptick in utilities (US Utilities ETF +1.04%).
It was announced that General Electric (NYSE:GE) (-1.74%) will be removed from the Dow Jones Industrial Average (DJIA – US 30) index due to the dwindling value of the company. GE continuously belonged to the DJIA for the past 110 years.
Netflix (NASDAQ:NFLX) (+3.77%) raced further up towards a new all-time high over bullish analyst reviews over increased appeal of original content and expectations of international user growth.
On Wednesday chip make Micron is set release its quarterly earnings. The Mortgage Bankers' Association is due to release its mortgage market indices and data on Existing Home Sales is due to be published.
Pivot: 2754 Support: 2754 2743.5 2735 Resistance: 2780 2786 2794 Scenario 1: long positions above 2754.00 with targets at 2780.00 & 2786.00 in extension. Scenario 2: below 2754.00 look for further downside with 2743.50 & 2735.00 as targets. Comment: the RSI is bullish and calls for further upside. The index is supported by a rising trend line.